With immense customisation requirements, and few application mega vendors in the space, the hospitality sector is now awakening to business applications that have been slow to take off. The plot is just beginning to thicken. By Mehak Chawla
It is not unlikely, nowadays, to find an email emanating from a hotel you recently stayed with, landing in your inbox. Though quite a good number of such mails are immediately deleted, they do point towards a certain trend. They are a sure shot indication of the evolving use of IT in the hospitality vertical.
Unlike other verticals, that first go about implementing their resource planning software and hop over to customer relationship management (CRM) only as they mature their IT infrastructure, hospitality does a U-turn and often begins with customer facing apps.
That particular characteristic has not only made hospitality a unique vertical, but has also made IT applications, in general, unavailable to the segment, simply because they haven’t been designed keeping in mind their unique demands. Owing largely to this fact, adoption of IT in hospitality has been slower when compared to other segments. Things, however, seem to be changing for hospitality with some niche vendors mushrooming in the space, as well as the mega vendors beginning to take notice of the vertical.
As with other segments, it is the biggies – be it airlines or hotel chains- that are taking the tech leap for hospitality. Software implementations in the segment vary from a simple back end automation to elaborate hotel management systems. However, the momentum for large scale application deployments is yet to pick up in hospitality.
What is clear as of now, is the potential that the vertical has to manage their complex operations though a strong application network.
The unknown ERP
The application that, in general understanding, is believed to be the backbone of all IT 
infrastructure, is a fairly unknown name in the hospitality vertical. It is not to be assumed however, that because hotels don’t have an ERP, they have no application network at all.
According to C.G. Prasad, Director, Information Systems, Premier Inn India, hotels, except the big ones, rarely go in for traditional ERPs like SAP, Oracle etc. Amlan Ghose, Managing Director, Prologic First, a company catering exclusively to the IT needs of hospitality, mentioned that when it comes to ERP, it is an unfamiliar term for most hotels. What they use, in its stead, is loosely referred to as Hotel Management System (HMS). HMS encompasses several things like back-end automation, front end point-of-sales, financial management, HR and other ancillary apps.
A key reason for ERP being relatively unknown in the hospitality vertical is that not a lot of mega vendors design their basic ERP suites to cater to the needs of hospitality. As a result, up to date hotel management systems have caught up. Experts believed that one queer phenomenon happening with respect to hospitality is that while mid-sized enterprises in various verticals are investing a lot of energy and finances in their ERPs, it is hardly being considered as a must have application by the small and mid-sized hotels.
Sudhir Sinha, President & COO, Best Western India, reasoned this out by mentioning, “With an ever demanding customer wanting information on his fingers tips, traditional ERPs which are only focused on managing hotel processes, are outdated. Whereas, the next generation hotel management systems and solutions that are more focused, assist us with the right information to enhance guest experience, and provide proper interfacing with social networking sites.”
Another interesting facet here is that the ERP-hospitality equation in India is a contrast when compared to other nations, where hotels are big users of enterprise resource software. It is in fact, common to find even small boutique hotels depending heavily on ERPs for their day to day operations. Revealed Prasad of Premier Inn, “We do use Microsoft Dynamics for ERP in the UK, where we have more than 700 properties to handle.”
While this extensive usage of ERP in other nations may be because of the regulatory landscape, experts believed that such a scenario is unlikely to surface in India in the near future. For now, the hospitality industry is keeping away from ERP and going in for other specialised software.
Enter the property management system
Given the unpopularity of ERP in hospitality, we may wonder as to what is it that is forming the backend of IT infrastructure for hotels. More often than not, it is the Property Management System (PMS), which can loosely fit the description of a hotel ERP, except for the fact that in most cases, it is highly customised, despite being an off the shelf software.
While it is also referred to as a Hotel Management System (HMS) by some vendors, analysts argue that HMS is much wider in its scope than a traditional PMS. PMS initially evolved as a software of choice for hotels who were dealing with complex operations as they grew. For example, Best Western India invested in a PMS about a year back when their reach expanded and several new properties came under their umbrella.
The solution automated Best Western’s entire back end processes. According to Binu Mathews, President and COO, IDS Software, “Best Western deployed IDS’ Fortune suite, a comprehensive application that can address all aspects of property management like reservations, commissions, internet booking, rate management, banqueting, inventory management, maintenance management, restaurant management and complete back office capability.”
Hotels automating their back-ends with the help of PMS was a trend that took off a couple of years back, and has now become a commonplace occurrence. “Hotels are adapting to PMS more and more and drifting away from generic ERPs. This helps them operate more efficiently and helps their staff adapt to it much faster. Hotel management systems are built to directly map the hotel operations and are better aligned to the needs of a hospitality business,” explained Aditya Sanghi, CEO and Co-Founder, Hotelogix, a company operating in the hotel software space.
What is also happening now is that hotels are busy expanding upon their PMS, or moving beyond PMS to venture into an HMS platform that gives them a broader handle.
Prasad opined, “There are quite some hotels who are venturing out of the traditional PMS, but this phenomena is limited only to few.” He also gave an example of Microsoft Dynamics that they are using over and above their PMS. “We are running some apps over and above the traditional PMS which is installed on our private cloud. At the same time, we are leveraging the benefits of Cloud computing by installing the basic PMS application in our private Cloud.”
According to Senthil Kumar , Director and CEO, The Tamara Coorg, “New applications for jobs like real-time inventory access, seamless exchange of operational information and collation of key performance data, that are sitting over and above the traditional PMS platforms, have transformed the hotel and restaurant business. At The Tamara Coorg, these include solutions for inventory management, financial reporting, menu management, security management, green technologies, resource management and data management at the back-end.”
Thanks to this interest in HMS and other niche solutions, there are smaller, vertical specific vendors cropping up to take care of the application needs in the hospitality industry. Explained Ghose, “Hospitality management systems are niche applications and are doing quite well in India. However, for new technology concepts like business intelligence or in-room technologies, adoption is low. This is due to the investment required and because awareness about benefits is not adequate.”
All about customer loyalty
If there is one software that makes immense sense for hospitality as an industry, it is the Customer Relationship Management (CRM), but there is a slight twist in this tale as well. Though customer facing apps are the obvious focus of hospitality players, it is the loyalty bit that is garnering a lot of enthusiasm from the hospitality CIOs.
Sunil Padmanabh, Research Director, Gartner India, mapped the loyalty trend in the hospitality segment. “A big activity that all of the hospitality industry is undertaking is revamping their loyalty programmes that encompass customer management and engagement.”
He added that hospitality players, off late, are also working on integrating various loyalty programmes that their customers have. There is also some work going on in embedding these programmes within their CRM and integrating them with partner loyalty and other such applications.
A key challenge in loyalty management applications is that isolated loyalty software hardly exists in the Indian market. Mega vendors are selling the loyalty bit as a part of their CRM stack. “However, loyalty software is now catching up in a hosted or Cloud model,” said Padmanabh.
Another aspect here is that since loyalty programmes in India are still at a very nascent stage, availability of loyalty centric apps is becoming an impediment. That is one of the biggest factors that is keeping hotels away from using advanced analytical tools. According to Sayinath A.G, Associate Vice President – BI & Analytics Services, Sonata Software, “Usage of analytics in any industry is linked to industry evolution. When we compare the western countries with India, there is a vast difference, because loyalty programmes, which are the foundation of analytics, are nonexistent in India.”
Sayinath was of the view that the Indian customer is still largely anonymous to the marketers and that in turn, is resulting in loyalty programmes not being well rooted. Padmanabh, however, gave a silver lining to this loyalty puzzle when he remarked that the drive to use advanced apps coupled with mobility could give hospitality a much needed impetus to rehash their loyalty endeavours.
Advancing the application stack
When it comes to advanced or sophisticated software like analytics or even enterprise mobility apps, hospitality has not shown many fireworks. The usage of advanced apps, in hospitality, according to Padmanabh, is fairly low, the reason being that integration with various points is a challenge. “Unless we see CRM maturing and moving onto the Cloud, which is not likely before 18 months, it is unlikely we will see advanced apps being utilised by hospitality.”
Though the adoption of analytics in hospitality may be nothing to write home about as of now, the industry is charting strategies to inhance their application stacks. Sinha of Best Western India said, “The next generation solutions in hospitality are expected to be more versatile not only in managing processes but also being able to fit into the new technology, provide more insight into business and help with decision making process .”
Although not many players are using BI and its sister apps in the hospitality verticals, there are some hotels that are deploying innovative technologies like check-in kiosks and integration of sites like TripAdvisor with their own websites. “Many budget hotels have come up with the strategy of installing ‘Check In Kiosks’ at reception to enhance the check in procedure. We have found higher levels of acceptance for these amongst our guests in some of our London properties,” said Prasad.
Kumar of Tamara was also of the view that business applications integrated with smartphones, will open a variety of delivery mechanisms for personal guest services. “We too, have employed QRC codes so that we may communicate more effectively and reduce our dependence on printed collaterals.”
Nikhil Arora, MD and VP, Intuit Technology Services was also optimistic about an application revolution in financial reporting, with hospitality being one of the key verticals driving the adoption of financial software. “Going from cash to cash-less is a big possibility in the Indian market and retail and hospitality can drive this transition.”
However, if hospitality needs to tread any closer to the usage of sophisticated applications, there are several glitches that need to be looked into.
Applicable challenges
Since the appetite of hospitality has thus far been low for applications, their IT budgets have followed suit. As a result, it is a struggle for IT heads to manage within their budgetary constraints.
Another recurring challenge in this space is that whenever a hotel chain acquires a property, the systems needs to scale up, and in some cases, even be overhauled. Mathews of IDS said that this becomes particularly challenging if the newly acquired property has its own legacy system in place. “In such scenarios we have to convince the owner to switch to our system. This is not always easy,” he said.
Coupled with this is the challenge of integrating a master application like PMS or HMS with the back-end operations of every single property. This can often prove to be time consuming as the application needs to be customised at several junctures.
Commenting on acceptability challenges, Prasad opined that hospitality was no different than other verticals when it came to grappling with training and user acceptability for newer apps. “Also, as hospitality industry is highly customer focused we need to ensure minimum downtime in case of any kind of installation or maintenance.”
Kumar of Tamara felt that enterprise resource planning system deployments are large in scope and more complex when compared to any other IT program. “Inevitably, they touch the core business of the enterprise and typically trigger process and operation-level changes across business divisions. ERP applications also end up having myriad integrations with satellite applications, data warehouses and external systems, resulting in complex technology architectures and dependencies.”
“With growing complexity of systems, hotels face challenges in maintaining IT systems. Competent IT managers are scarce and expensive,” said Ghose of Prologic. Owing to these challenges and the huge level of customisation involved, limited engagement of mega vendors’ in the hospitality domain hardly comes as a surprise.
Vendor landscape
Since none of the mega vendors, with the exception of Microsoft, have a substantial play in hospitality (except the big hotel chains), the segment is studded with the presence of smaller, vertical specific and niche vendors. The industry too seems to be comfortable with the near absence of big vendors. Said Kumar, “The hospitality industry is a service-based industry; so implementing an appropriate vertical application provides many benefits over a horizontal solution. Since such applications are built for a specific industry segment, they also come with support for specific industry regulations and compliance requirements.”
The market seems to be rosy for these vendors from another perspective as well. Hospitality industry, which has been a firm believer in in-house applications, is slowly moving towards outsourcing models. While the smaller, individual hotels are still in the in-house gear, mid-sized hospitality players are all for outsourcing their application requirements.
Commenting on the in-house Vs outsourcing debate in the hospitality industry, Sinha said, “I think this debate has already faded off and in-house is old school of thought. There was a period in hospitality industry where everyone wanted to do everything in-house, with special emphasis on data security and privacy. The hoteliers are now very open to outsourcing and Cloud computing is redefining the rules.”
Sanghi also felt that the outsourced or out of premise systems ( on the Cloud ) would be a clear winner very soon, specially in the SME segment. “Cloud based systems not just benefit the hotel with simplifying their life in terms of operations, but also is better equipped to integrate with the external marketplaces like Expedia, Bookings.com, GDS, multi-property scenarios etc.”
Explaining the vendor turf in hospitality, Ghose said , “The market offers a few vendors in each category. The major chain brands have standardised on one international vendor (Micros-Fidelio) for reservations, distribution and hotel operating systems. They use Indian solutions in the back office and market share in the remaining market is highly fragmented.”
With mobile applications being in vogue with hospitality, some of these vendors are expected to diversify while some new ones are also likely to enter the hospitality scene.
Mobile future
Mobile happens to be the technology that everyone in the hospitality segment is betting upon. Be it customer reservations or front end services like room automation, mobility based apps are expected to drive hospitality’s consumption of technology significantly.
Padmanabh corroborated to that by saying, “The key advantage with mobility it that it can be used for providing customised information and offers to the consumer. Focus of the hospitality segment on mobility and mobile apps is going to strengthen in the near future.”
However, the takers for mobility, as of now, seem to be few. “The availability is very limited. Those that are available, are limited in functionality and not widely distributed. We offer some apps but find usage negligible. Hotels, in India, have not yet warmed up to mobile apps,” said Ghose. He added that this scenario is likely to change in the near future.
Once mobility comes into play, it could open up a whole lot of avenues for vendors, right from developing mobile apps to mobile device management.
